_Osric Investments Pty Ltd v Probst & Anor_

_Osric Investments Pty Ltd v Probst & Anor_ - [2007] QSC 293 - QSC 2007 case summary — Zoe

Judgment (54 paragraphs)

[1]

Bennett & Philp for the first and second defendants.

[2]

[1] DAUBNEY J: The first defendant has applied for an order that this proceeding against her by her former employer be stayed 'pending the disposal of criminal proceedings for which the defendant was committed for trial by the Richlands Magistrates Court on 15 May 2007'. This civil proceeding and the criminal proceedings both turn on allegations that the first defendant, while employed as the plaintiff's QA/Administration Manager, stole money from the plaintiff.

[3]

[2] This proceeding was commenced by a claim and statement of claim which were filed by leave on 24 March 2006 when the plaintiff applied for, and was granted, interim relief in the nature of a Mareva Order against the first defendant. That application returned before the court on 29 March 2006, at which time Holmes J (as she then was) made a Mareva Order in more expansive terms and containing the usual exceptions for living expenses, mortgage payments and legal costs. On 5 July 2006 Wilson J ordered, on an application by the plaintiff, that the second defendant be added as a defendant to this proceeding and gave the plaintiff leave to amend its pleadings. Pursuant to that leave, the plaintiff filed its amended claim and amended statement of claim on 6 July 2006.

[4]

[3] In summary, the case pleaded against the first defendant is as follows:

[5]

(a) The plaintiff is a wholesaler of fruit and vegetables at the Brisbane Markets;

[6]

(b) Between 21 December 1992 and 13 April 2006, the first defendant was employed as the plaintiff's QA/Administration Manager;

[7]

[8]

(d) The plaintiff maintains records of its daily takings and bank deposits;

[9]

(e) Between 11 June 1999 and 20 March 2006, the first defendant did not bank all of the cash received by the plaintiff each day, but misappropriated cash to herself; and

[10]

(f) The amount of cash alleged to have been misappropriated by the first defendant over this period is $1,503,175.23. This amount is calculated by comparing the records of cash received by the plaintiff's business on each day with the records of the amount of cash banked.

[11]

[4] The managing director of the plaintiff, Mr Peter Tighe, swore an affidavit on 24 March 2006 in which he deposed to having become aware on the previous weekend of discrepancies between the cash takings and cash bankings, and of the comparisons he made at that time. He referred the matter to the Queensland Police, and gave evidence of a meeting on 21 March 2006 attended by him and his general manager, a number of police officers and the first defendant. Mr Tighe said

[12]

The allegations of misappropriation were put to the defendant at this meeting and whilst she did not speak she did not deny them and appeared to acknowledge them by nodding as the allegations were put. She subsequently apologised to me in a private meeting on the same day.

[13]

[5] At the time Mr Tighe swore this affidavit, the quantum of the alleged misappropriation was claimed to be some $267,000 for the period February 2005 to March 2006. As noted above, the quantum claimed in the amended statement of claim filed on 6 July 2006 is $1,503,175.23 for the period 11 June 1999 to 20 March 2006.

[14]

[6] In July 2006, the first defendant was charged with the offence of stealing as a servant and other offences relating to falsifying entries and records and destroying records. The committal hearing relating to those charges did not come on until 15 May 2007 in the Richlands Magistrates Court, at which time the first defendant was committed for trial. By the time of the hearing of the current application before me, no indictment had been presented against the first defendant. The opinion of her solicitor in the criminal matters is that it is difficult to estimate when the criminal trial will be heard, but it is unlikely to be this year.

[15]

[7] There had been some agreement reached between the plaintiff and the first defendant that the civil proceedings against the first defendant would effectively be stayed until the conclusion of the committal proceedings. When that arrangement was being negotiated, the solicitors for the first defendant wrote a letter dated 9 August 2006 to the plaintiff's solicitors in which they asserted the view that the first defendant 'should be entitled to a stay of the civil proceedings against her pending the outcome of the criminal proceedings'. In the course of justifying that contention, the first defendant's solicitors said

[16]

You have indicated in past conversations that the first defendant has made certain admissions. We are instructed that those admissions are simply that the first defendant has misappropriated an amount of money. The quantum of this amount on the first defendant's instructions is vastly different from the amount claimed by your client. It will be a requirement in the civil proceedings to particularise this amount in the circumstances where the Crown has not yet delivered their proof of evidence to the first defendant in the criminal proceedings to enable the first defendant to consider the case made against her in the criminal proceedings.

[17]

[8] On 25 May 2007 the plaintiff's solicitors wrote to the first defendant's solicitors noting that the committal proceedings had concluded, and calling on the first defendant to file and serve her entry of appearance and defence by 14 June 2007. On 1 June 2007, the first defendant's solicitors responded saying

[18]

We also refer to our facsimile dated 9th August 2006 when we advised that it is our view that the First Defendant should be entitled to a stay of proceedings against her pending the outcome of the criminal proceedings. Our view has not changed. We update our comments in that letter as follows:

[19]

The Plaintiff has secured all of the assets of the Defendant necessary to satisfy any judgment which may be obtained against the First Defendant. This minimises any prejudices that the Plaintiff may suffer as a result of any stay of proceedings.

[20]

The First Defendant still has a right of silence in the criminal proceedings. The Plaintiff is requiring the First Defendant to file a Defence in the civil proceedings. The Defence will require particularisation of matters which the Defendants right of silence would not have to be disclosed at this stage of the criminal proceedings. As stated previously the pleading will require our client to specifically particularise any amount which she may or may not admit has been misappropriated. Such an admission is not required at this stage of the criminal proceedings and accordingly there is a real danger of injustice in the criminal proceedings.

[21]

As stated in our previous letter if the civil proceedings are not stayed it is likely the civil proceedings will be heard by the court prior to the criminal proceedings requiring the First Defendant to be cross examined about matters which again under the First Defendant's right to silence could lead to an injustice and adversely affect the First Defendant's rights.

[22]

We are aware that the onus is on our clients to show why the stay of proceedings should be granted. At this stage your client has not outlined any facts which will give rise to prejudice against your client that cannot be rectified by an award of damages.

[23]

[9] The plaintiff's solicitors, by letter dated 21 June 2007, advised that the plaintiff was not prepared to agree to any further postponement of the filing of the first defendant's defence, thus precipitating the present application by the first defendant for a stay of these proceedings.

[24]

[10] In an affidavit sworn in support of this application, the first defendant's solicitor has said that if 'these proceedings proceed prior to the criminal proceedings then the Defence in this action will require our client to specifically admit or deny whether or not the amounts pleaded in the Plaintiff's Amended Statement of Claim have been misappropriated'.

[25]

[11] In McMahon v Gould,[1] Wootten J propounded the following guidelines for considering applications of this nature (omitting citations):

[26]

(a) Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court;

[27]

(b) It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper ground;

[28]

(c) The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with;

[29]

(d) Neither an accused nor the Crown are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding;

[30]

(e) The court's task is one of "the balance of justice between the parties", taking account of all relevant factors;

[31]

(f) Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors;

[32]

(g) One factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's "right of silence", and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding. I return to this subject below;

[33]

(h) However, the so-called "right of silence" does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceeding;

[34]

(i) The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings;

[35]

(j) In this regard factors which may be relevant include:

[36]

(i) the possibility of publicity that might reach and influence jurors in the civil proceedings;

[37]

(iii) the possibility of miscarriage of justice eg by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses;

[38]

(iv) the burden on the defendant of preparing for both sets of proceedings concurrently;

[39]

(v) whether the defendant has already disclosed his defence to the allegations;

[40]

(vi) the conduct of the defendant, including his own prior invocation of civil process when it suited him;

[41]

(k) The effect on the plaintiff must also be considered and weighed against the effect on the defendant. In this connection I suggest below that it may be relevant to consider the nature of the defendant's obligation to the plaintiff;

[42]

(l) In an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and they stayed.

[43]

[12] The utility of this catalogue of considerations has been recognised on numerous occasions by courts at first instance and on appeal.[2] Although there have been a number of observations by appellate judges to the effect that these guidelines may need to be revisited to give a proper reflection on contemporary public interest[3], unless and until a revision of these guidelines is undertaken by an appellate court it is appropriate for me to adopt them as applicable to the present case.

[44]

That the principles identified by Wootten J are a useful guide to the exercise of the court's discretion on an application such as this was also expressly recognised by Hayne J in Australian Securities Commission v Cavanagh,[4] where his Honour also said:

[45]

In my view it is therefore clear that unless reason is shown to the contrary, a plaintiff is entitled to have its action tried in the ordinary course of the procedure and business of the court and that it is a grave matter to interfere with that entitlement by a stay of proceedings, the grant of which would require justification on proper grounds. In the end the task is one of the balancing of justice between the parties taking account of all relevant factors and adjudging the case on its own merits.

[46]

[14] The principal basis on which the first defendant seeks to justify the stay is that, because she has not yet disclosed her defence to the allegations made in the civil proceedings, and given the overlap between the matters at issue in each of the criminal proceedings and the civil proceedings, a requirement that she plead to the specific amounts alleged to have been misappropriated gives rise to a real risk of prejudice to her conduct of the criminal proceedings.

[47]

[15] In short, the first defendant would seek to maintain her 'right to silence' in relation to the specific amounts alleged to have been misappropriated to save making what may otherwise be regarded as admissions in relation to the criminal proceedings.

[48]

[16] The first defendant argues that the misappropriations alleged against her are particularised by comparing the amounts of cash banked with the amounts of cash sales on particular days in the business. It is said that this gives rise to a circumstantial case against the first defendant and that she could suffer prejudice if she is now forced to plead a defence to those allegations.

[49]

[17] With respect, I do not see that any such prejudice displaces the plaintiff's right to progress the civil proceedings. As noted above, the first defendant, by her solicitors, has already admitted to having engaged in some misappropriation, although she has not revealed how much and on what occasions. To the extent that pleading to the statement of claim in the civil proceedings will require the first defendant to identify the amounts of the pleaded sums which she admits having misappropriated (if any), she will also undoubtedly deny the balance of the alleged misappropriations on the basis that she did not misappropriate the moneys as alleged. In those circumstances, I fail to see how it can be said that a requirement that she plead to the statement of claim in the civil proceedings will cause her prejudice to a degree that would outweigh the plaintiff's entitlement to pursue the civil proceedings. I do not consider, in those circumstances, that there is a real danger of injustice to the first defendant in the criminal proceedings by requiring her to defend the civil proceedings.

[50]

[18] None of the other factors identified in paragraph (j) of Wootten J's catalogue of considerations impact to any significant degree on the present case. It is conceivable that an extra burden may be cast on the first defendant by the necessity to prepare for both sets of proceedings, but, given the commonality of the relevant issues, it is likely that there would be a significant overlap in the work involved in preparing for both proceedings in any event.

[51]

[19] In undertaking the requisite balancing exercise, I have also had regard to the fact that the plaintiff has the practical benefit of the Mareva Orders which preserve the first defendant's property. Whilst that certainly assists in maintaining the status quo, it does not, in my view, defeat the plaintiff's entitlement to progress the civil proceedings.

[52]

[20] In all the circumstances, the first defendant has not persuaded me that this is an appropriate case for a stay of the civil proceedings. I therefore order:

[53]

(b) The first defendant pay the plaintiff's costs of and incidental to this application to be assessed on the standard basis.

[54]

[1] (1982) 7 ACLR 202.
[2] See, eg, Phillipine Airlines v Goldair Australia Pty Ltd [1990] VicRp 34; [1990] VR 385; Yuill v Spedley Securities Ltd (in liq) (1992) 8 ACSR 272; Guglielmin v Trescowthick [2005] FCA 139; (2005) 220 ALR 535; Gallagher v Collins (2006) BSC 139; Commonwealth Bank of Australia v May [2007] NSWSC 490; Niven v SS [2006] NSWCA 338.
[3] Yuill v Spedley Securities Ltd (in liq) (1992) 8 ACSR 272, 274 (Kirby P); Niven v SS [2006] NSWCA 338, [2] (Beazley JA).
[4] (1993) 12 ACSR 69, 72.

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